Wal-Mart silenced Mexican bribe inquiry

Sun Apr 22, 2012 12:39pm EDT
 
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By Nivedita Bhattacharjee

(Reuters) - Wal-Mart Stores Inc, the world's largest retailer, squelched an internal investigation into allegations of bribery at its Mexican subsidiary instead of broadening the probe, the New York Times reported on Saturday.

The Times said that in September 2005, a senior Wal-Mart lawyer received an e-mail from Sergio Cicero Zapata, a former executive at the company's largest foreign unit, Wal-Mart de Mexico, describing how the subsidiary had paid bribes to obtain permits to build stores in the country.

Wal-Mart sent investigators to Mexico City and found a paper trail of hundreds of suspect payments totaling more than $24 million, but the company's leaders then shut down the investigation and notified neither U.S. nor Mexican law enforcement officials, the Times reported.

According to the Times, current Wal-Mart Chief Executive Mike Duke and former CEO Lee Scott, who now sits on the company's board, were among senior executives allegedly aware of the situation.

Wal-Mart said in a statement on Saturday it was "deeply concerned" about the allegations in the Times report and began an investigation into its compliance with the U.S. Foreign Corrupt Practices Act (FCPA) last fall. The company also said it had disclosed the probe to the U.S. Department of Justice and the Securities and Exchange Commission.

"Many of the alleged activities in The New York Times article are more than six years old. If these allegations are true, it is not a reflection of who we are or what we stand for," said David Tovar, vice president of corporate communications at Wal-Mart.

The company said it had taken steps in Mexico to boost internal controls for stronger FCPA compliance. It declined to make any executives available for comment, and said the investigation was continuing.

Richard Cassin, a U.S. FCPA lawyer, said Wal-Mart faces an uphill battle to convince the Justice Department and SEC that its problems are confined to Mexico.   Continued...

 
A worker walks through the "Action Alley" at a new Wal-Mart store in Chicago, January 24, 2012. REUTERS/John Gress